What vaults are and how they grew

Vaults are a decentralised finance twist on lending. They run on public code instead of brokers, but each pool has a curator who behaves like a fund manager by picking the playbook, defining risk limits and taking a cut. Users connect a wallet, choose a strategy and start seeing interest almost right away.

Why the surge in deposits? Digital asset holders are trying to squeeze extra income from stablecoins by lending to traders. Per Blockworks, deposits have risen above $10bn, after starting last year at $4bn. Typical approaches involve lending or staking for 3 to 10 percent, while stretch-for-yield variants can top 20 percent.

Backers see vaults as paving the way to tokenise and trade legacy instruments…